Barack Obama has urged the House of Representatives to approve the deal (Picture: Getty)

President Barack Obama has urged the House of Representatives to back a Senate-approved deal to avoid the so-called ‘fiscal cliff’ of huge tax increases and spending cuts.

Congress met on December 31 in a bid to agree on a deal that would prevent billions of dollars’ worth of tax increases and spending cuts from coming into effect, but by the evening president Barack Obama was forced to admit an agreement was ‘within sight, but it is not done’.

In a press conference he said there were ‘still issues to be resolved’ as he admitted there was no chance of an overall agreement on how to tackle the deficit.

The US Senate agreed a last-minute deal to avoid the ‘fiscal cliff’ (Picture: Getty)

‘Today it appears that an agreement to prevent this New Year’s tax hike is in sight, but it is not done.

‘There are still issues to be resolved but we are hopeful it can be done. But it’s not done.’

With the midnight deadline looming the Democrat-led Senate continued negotiations, eventually passing legislation early New Year’s Day to block tax increases and spending cuts by 89-8.

The bill is now being discussed in the Republican-dominated House of Representatives, with Mr Obama urging politicians to approve the deal.

Vice-president Joe Biden had joined the negotiations (Picture: Getty)

He said: ‘While neither Democrats nor Republicans got everything they wanted, this agreement is the right thing to do for our country and the House should pass it without delay.’

Mr Obama said the bill takes a balanced approach to shrinking the deficit by ‘investing in [the] middle class’ while ‘asking the wealthy to pay a little more’.

The legislation prevents sharp tax rises for the middle-class but raises rates on incomes over $400,000 (£245,800).

The bill also delays spending cuts, which were due to come into effect today, for two months, paving the way for more negotiations.

It also extends unemployment benefits for the long-term jobless, prevents a 27% cut in fees for doctors treating Medicare patients and blocks a $900 (£553) pay rise for members of Congress.